Antitrust ruling stopped prior partnership between hospitals

Varied talks date to 1990s

Dec. 18, 2013

Written by

John Ferro

Poughkeepsie Journal

Should Health Quest emerge as the winning bidder for Saint Francis Hospital’s assets, the deal would be the final chapter in an off-and-on courtship.

All through the 1990s, Vassar Brothers Medical Center, which is owned by Health Quest, and Saint Francis explored everything from consolidating services to merging.

Some of the efforts resulted in partnerships. But a decisive blow was dealt by the courts after the state Attorney General’s Office sued to end one deal under state and federal antitrust laws. That is why Health Quest officials said they reached out to gauge the temperature of the Attorney General’s Office before bidding for Saint Francis.

“We know what happened … and we didn’t want to repeat what happened,” said David Ping, Health Quest’s senior vice president for strategic planning and business development. “We are getting a sense from (the state) that they believe that this needs to happen in the community.”

A spokesman for Attorney General Eric Schneiderman declined comment Wednesday.

Talks between the two hospitals date to at least 1990, when Saint Francis announced the layoff of 50 staff positions and confirmed that discussions had begun with Vassar Brothers about a consolidation of services.

In 1995, the hospitals considered a “virtual” merger, which would have resulted in common governance, medical staff and management. Those talks fell apart a year later, in part because Saint Francis’ Catholic affiliation prevents it from merging with a hospital that performs abortions and certain birth control procedures.

The failed merger did produce a stepchild: Mid-Hudson Health, a partnership in which each hospital would perform certain services such as cardiac catheterization, MRIs and lithotripsy, a way to treat kidney stones.

State Attorney General Dennis Vacco sued, saying the hospitals engaged in price fixing by negotiating jointly with insurance companies and by agreeing to offer only certain services and thereby avoid competing with each other. Vacco lost to Eliot Spitzer in 1998, but Spitzer pressed on with the suit.

In 2000, U.S. District Judge William Conner sided with the state. Connor wrote the court “is acutely” sympathetic to hospitals’ struggle to survive. However, “these activities are classic examples of … antitrust violations which the courts have uniformly condemned, despite claims that such cooperation is justified by economic necessity.”